The importance of redefined standard work to set your organization up for digital success
Standard work is a fundamental principle of Lean manufacturing. It systemizes the processes that the workforce and machines perform upon materials by setting protocols and objectives involving the sequencing and rate of production (‘takt time’) to meet demands; standardizes the in-process materials and parts; and minimizes holding inventories to optimize operations.
Multiple benefits are created through standard work. Primarily, its predictability reduces variations and allows for operational planning and routine fulfilment. In doing so, it enables the workers to understand their deliverables, track progress and work safely. Standard work – as a documented and monitored baseline – also represents the platform for another Lean principle: Continuous improvement or kaizen.
Standard work is a crucial aspect of traditional production systems which have driven the success of leading manufacturers since the middle of the previous century, and contributed to the expansion of many of these companies into global operations. Structured, standardized processes and Lean management practices gear consistent, high-quality output and performance, and eliminate waste and inefficient activities. They also allow for transference across worldwide operations.
But manufacturing organizations – entire industries – have changed irrevocably in the last decade.
Digital operating systems require a redefinition of standard work
Industry 4.0 has created and enabled the realm of smart, distributed manufacturing services – production systems, factories and logistics – called Digital Operating Systems (DOS).
The potential of digital systems is enormous. The Center for Global Enterprise estimates a 10% revenue boost and a 20% cut in procurement costs through digitization. A separate study estimates that digital operations, which include a modern manufacturing execution system (MES), will unlock 40% to 50% of extra end-to-end value.
How, exactly, will these numbers be generated? They will not arise by default, but will be achieved through scaled digital innovations, workforce engagement and human-machine interface.
But change is difficult and comes with obstacles, and the more fundamental the desired change, the more risks. Truly lasting, transformative change works better when it builds on the foundations of past success. “The secret of change is to focus all of your energy not on fighting the old, but on building the new,” wrote the ancient Greek philosopher Socrates. In that sense, in the forging of tomorrow’s factories, the foundations of the modernized production systems, or DOS, are already in place, a point confirmed by global advisory firm Gartner, who defines DOS as retaining – even strengthening – Lean foundations of production and continuous improvement.
So, to the question ‘Is standard work still relevant?’ The answer is a resounding ‘Yes’. But organizations would need to adapt their standard work processes so that its principles align with their DOS’s levels of capability, business ecosystems and competitive benchmarking.
Just as standard work is a method, so too its refinement for digital systems involves methodical thinking. The following is a framework with guide-ropes and pointers for smooth navigation to a modernized production system or DOS.
Orchestrating the redefinition of standard work within a DOS
Revisiting standard work realistically starts with an understanding of the stage of maturity of the organization’s migration to digital. The status of the transformation sets the scope for redefining standard work.
This is especially important because studies prove the financial performance gains of digital, with 45% of companies at mature stages of progression reporting higher revenue growth than their industry average, and 43% reflecting better net profit margins. These performances are compelling reasons to accelerate transformation. But the smarter strategy is to match the pace of change to the organization’s pulse. The organization needs to keep operating effectively. As such, digital tools should be implemented without compromising the organization’s existing best practice implementation.
This is where standard work can really add value. For an organization to build its digital transformation roadmap on a best practice foundation, standard work should be maintained, and reassessed to ensure it meets the organization’s needs in its migration to digital.
To itemize areas where standard work needs reassessment, consider these four pillars: manufacturing processes and production tasks; leader standard work; innovation and collaboration; and employee change management.
- Manufacturing processes and production tasks
Kaizen, with standardized work as its foundation, is the idea that holistic, step-by-step, bottom-up, planned and structured improvement initiatives will lead to world-class processes and outputs, and competitive advantage. Lean principles and the templates for continuous improvement have served leading manufacturers well over previous decades, and they remain applicable. Manufacturers who historically embraced Lean and kaizen already have a framework to guide the management, control and performance of digitized production systems.
The crux, however, is to understand that a DOS has a ramped up purpose. Outputs need adjustment to meet the expectations of customers themselves undergoing metamorphoses in their environment. Workflows need to be attuned to the requirements of a more agile, flexible, demanding value network. Broadly, re-evaluating task and process standard work in these ambits will kick-start an appropriate re-gearing:
Data. Data creates insights; real-time data elevates the potential of these insights. When combined with predictive analytics – attributed in one survey as the technology with the single greatest manufacturing impact – the result is liberated decision-making and agility.
Visualization and interfaces. When standard work is made visual it enhances motivation, monitoring, and delivery – and democratizing the data, and communicating its meaning and insights, is a major digital capability. There are multiple tools to incorporate dashboards and digital whiteboards into any manufacturing or off-site location, to report any performance metric in real-time, and to chart workflow process actions. And digital work instruction applications have multiple advantages, such as instant accessibility across locations and easy capture of specialized knowledge or instructions.
KPIs on the factory floor. These should be revisited based on the company’s state of adoption of digital applications and tools, including automation. Benchmark against appropriate comparisons, while being aware of the targets of best-in-class manufacturers – and look, also, to other industries as a measure of wider comparison.
Trends impacting tasks. Take stock of trends – they may already be altering the company’s manufacturing tasks or will soon be doing so. Consider, for example, how digital twinning aids predictive maintenance and fast-tracks innovation; and additive manufacturing (3D printing) can reduce waste. Some assessments are straightforward: The modernized production methods of Industry 4.0 can improve efficiencies in simple ways, such as Nike’s automated cutting processes in its nearly 800 worldwide factories.
Others may require deeper analysis, such as how augmented reality tools can add value to business tasks. Industrial wearables is projected to represent a $2.6 billion category in 2023, a five-year increase of 73%. On a longer horizon, but with potentially profound KPI impacts, semi-robotic worker exoskeletons is an industrial application capable of combining human intelligence and judgement with the power and precision of machines. In manufacturing, these may achieve 40%-100% improvements for physical tasks, and the category is expected to expand at 41% CAGR to 2026.
- Evolving leader standard work
A major organizational change towards DOS implies the need for its leaders to change, too, because leadership is core to any transformation: It orchestrates the culture and steers the required behaviors and new competencies.
In established Lean principles, Leader Standard Work (LSW) is a highly effective approach to initiate and sustain standard work throughout the firm. As the company moves towards a fully modernized production system, leadership tasks and ways-of-working will need to evolve too. In the initial phases of the migration there will likely be a need for a greater proportion of time on supervisory, standardized tasks; and later phases of DOS progression will probably require a much reduced percentage.
The principles of LSW will still hold: Pay attention to where the work is done (gemba walks, and the use and review of kamishibai visual control tools). But a digital enterprise inevitably sees increased leadership time for renewed focus on driving strategy, innovation and organizational design to capitalize on opportunities.
The redefined LSW, then, cultivates an advanced use of data and analytics to identify trends, embeds a ROI mind-set within senior levels of management, and instils accountability for stretch-goals throughout the company.
- Innovation and collaboration, adapted for digital
The Internet-of-Things has catalyzed humankind’s knowledge curve to an exponential gradient in the past decade. Soon, our available facts, information, images and data will double every twelve hours.
One of the intrinsic by-products of Industry 4.0 and related digital technologies is the ability to harness learnings, data, concepts and talent – globally and rapidly. And then to synthesize, model, test and refine using powerful computing capabilities.
The result is a near-ceaseless quest for disruptive innovation that will gain new revenues, competitive advantage in production or market share. ‘Operation Warp Speed’, the public–private partnership initiated by the US government to develop and produce a COVID-19 vaccine, is an example of technology and expertise in hyper-action, accelerating a conventional timeline of decades to less than one year.
This illustrates the context that it may be crucial to alter standard work protocols to fast-track identified NPD pipelines. Technology is an enabler of scaling quicker from concept to pilot to creation and value – effectively, a leaner methodology of innovation.
It also proves the power of collaborative efforts, especially in the multi-dimensional ecosystem of a digital network.
Remember, however, that standard work itself facilitates a rigorous culture of shared problem-solving – the essence of innovation.
- Employee change management and engagement
Digital transformation is also about transforming talent. New levels of employee motivation and performance are needed to truly optimize DOS.
Consider that, soon, workforce personnel in many categories will be responsible for new functions: By 2025 a fifth of all manufactured products will have no human role in their production. In certain industries, the manufacturing facility will be making entirely different outputs: Electric vehicle production – both cars and e-bikes – and modified, lightweight materials will represent a sea-change in the automotive industry in the near future.
Standard work must therefore include redefined training programs, knowledge-building capabilities and employee engagement measures which foster a culture of commitment and innovation.
Case study: Digital transformation is no longer an abstract
With the manufacturing sector facing cost and competitive pressures, and a shortage of skilled labor, digital transformation is its core strategy to remain strategically and operationally sound. The situation is epitomized by Connecticut, US-based machine shop Polamer Precision Inc., manufacturers of high-precision components for the aerospace industry. The company competes against lower-cost manufacturers based in India and China, and quality-driven rivals in Poland and South Korea. As such, it has implemented world-class digital systems and tools to redefine all aspects of standard work, including energy efficiency initiatives (the company’s plant has a solar power ‘farm’ on its roof) and optimized end-to-end visibility provided by a cloud-based ERP system across the entire company.
Polamer claims these technologies have achieved major continuous improvement gains, such as OEE analytics gearing the improvement of some production cycles by half, thereby doubling capacities for those outputs.
“We embrace the concept of Lean with an unsurpassed level of dedication. The mantra of creating more with less while eliminating waste is our guiding principle. Lean is something we implement throughout each department of the company. Our cloud based ERP (Enterprise Resource Planning) system optimizes the most granular tasks within each department for optimum efficiency,” says the company’s website.
Standard work as the bedrock of operational excellence
Standard work requires high performance in all composite parts of the production process, and when the organization needs to change, those aspects which drive excellence need to be firmly embedded – solidified for the change process, and updated appropriately to match the organization’s refreshed state. Standard work is so critical because it is the basic operations and functions, the glue of complex and intermeshed processes, and the tool to manage the business ecosystem towards perfection. Standard work also creates a solutions-orientated mind-set when problems are detected – and an attitude of pre-empting problems. This fosters a culture of continuous improvement.
“To improve is to change; to be perfect is to change often,” said Winston Churchill. Standards, benchmarks of competitiveness, and standard work is no longer about assessment at a point in time. As plants, factories and manufacturing entities transform, systems and next-generation networks will become increasingly connected, primed for innovation and smarter. Learnings, opportunities and possibilities are escalating because digitization is accelerating, and fluidity and flexibility are specific attributes of DOS. So, standards should be regularly reviewed, more frequently than before, and world-class production systems will be those that constantly look ahead and are uncompromising in redefining standards of excellence.
“To standardize work methods is the sum of all the good ways we have discovered up to present. It therefore becomes the standard. Today’s standardization is the necessary foundation on which tomorrow’s improvement will be based. If you think of standards as confining, then progress stops.” Henry Ford said a century ago. This still holds true for manufacturers today.